JurisdictionUnited States


Kathy Bazoian Phelps

Forensic accountants may not be flashy in a James Bond sort of a way, but they are key players in our complex and ever-changing business world that is often wrought with fraud. Talk to any forensic accountant involved in a high-stakes commercial fraud case, whether civil or criminal, and the thrill-seeking sense of accomplishment of beating the bad guys will fill the room with colorful stories.

Forensic accountants work in the world of finance and business deals. They actively compile and analyze data to scrutinize complex transactions, looking for signs of fraud and assessing damages. They may be retained by almost anyone with a legal or equitable interest in a particular financial transaction, including attorneys, bankruptcy trustees, equity receivers, insurers, financial institutions, governmental entities, private-equity firms, companies, corporate counsel, creditors and defendants. By bringing clarity to complex facts, they are an indispensable part of the analysis and administration of a commercial fraud case. Along the way, a forensic accountant occupies a front-row seat at a spectacular fraud show, often expressing wonder at the remarkable story hidden in the financial data.

It is a sorry statement about the pervasiveness of fraud in society today that the demand for the specialized financial and investigatory skills of forensic accountants is greater than ever. This book highlights the areas of specialty, challenge and reward for forensic accountants and the professionals who work with them in commercial fraud cases.

I. The Uniqueness of a Forensic Accountant

Forensic accountants are much more than number-crunchers. They are financial detectives, also known as fraud investigators, investigative accountants, forensic auditors, and fraud auditors. "Forensic" means "relating to or dealing with the application of scientific knowledge to legal problems."1

Fraudsters usually work hard to cover up their crimes, and they are very good at it. To uncover the truth, forensic accountants must look beyond the numbers. It is the forensic accountant who digs for the buried bones and blends investigative skills with financial know-how to find the obscure clues that unravel the fraud. Once the forensic accountant has applied investigatory skills to identify key financial issues, those issues are often placed in the context of a legal problem.

A complex financial fraud matter can showcase a forensic accountant's...

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